Question

Sheffield Corp., public camping ground near the Four Corners National Recreation Area, has compiled the following financial information as of December 31, 2019.
Revenues during 2019-camping fees $140,000 Notes payable $60,000
Revenues during 2019-general store 50,000 Expense during 2019 150,000
Accounts payable 11,000 Supplies on hand 2,500
Cash on hand 23,000 Common stock 20,000
Original cost of equipment 105,500 Retained earnings ?
Market value of equipment 140,000
Instructions
a. Determine Deer Park's net income for 2019.
b. Prepare a balance sheet for Deer Park as of December 31, 2019. (List assets in order of liquidity and liabilities from largest to smallest e.g. 10, 5, 3, 2.)

Answer 1

Answer:

(a) $40,000

(b) See explanation below

Explanation:

(a) Net Income for 2019

Revenues during 2019 Camping fees = $140,000

Revenues during 2019 General store 50,000

Expense during 2019 $150,000

Net Income = Total Revenue - Expenses

Net Income = $140,000 + $50,000 - $150,000

Net Income = $40,000

(b) Prepare a balance sheet

Assets

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . .$. 23,000

Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . .2,500

Equipment . . . . . . . . . . . . . . . . . . . . . . . . .140,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$165,500

Liabilities

Accounts Payable . . . . . . . . . . . . . . . . . . . . 11,000

Notes Payable . . . . . . . . . . .. . . . . . . . . . . . 60,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71,000

Stockholders' Equity

Common Stock . . . . . . . . . . . . . . . . . . . . . . 20,000

Retained Earnings . . . . . . . . . . . . . . . . . . . . 74,500

Total Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . .94,500

Total Liabilities and Stockholders' Equity . . . . . . . . . . . . . . . . . . .$165,500

Liabilities + Equity